Factbox: Sectors in which FDI caps will be revised

Reuters Staff

3 Min Read

NEW DELHI (Reuters) - India has relaxed foreign direct investment (FDI) rules across several industries, including telecoms, single brand retail and oil and gas, in a bid to lure capital inflows, prop up a sliding currency and accelerate growth.

A construction supervisor speaks on a mobile phone amid rolls of underground telephone cable pipes on the outskirts of the southern Indian city of Hyderabad November 29, 2010. REUTERS/Krishnendu Halder/Files

India’s weakest economic growth in a decade and a record high current account deficit have made the rupee the worst-performing emerging Asian currency so far this year.

The changes will have to be approved by India’s cabinet before they become law, although that is seen as a formality. Here are the sectors in which FDI caps will be revised:

TELECOMS

The FDI cap on the telecoms sector was raised to 100 percent from 74 percent. While a foreign company can buy up to a 49 percent stake in an Indian phone carrier without seeking approval from the Foreign Investment Promotion Board (FIPB), any investment beyond that will need the country’s foreign investment regulator’s nod.

PETROLEUM AND NATURAL GAS

The FDI cap for the sector was left unchanged at 49 percent, but foreign investment up to 49 percent will no longer require FIPB approval.

INSURANCE

Foreign investment up to 49 percent in insurers will not require the government’s approval. The foreign investment limit in the sector is currently capped at 26 percent. A bill to raise the cap to 49 percent is stuck in parliament.

DEFENCE PRODUCTION

There was effectively no change in the FDI cap of 26 percent in the defence sector, although trade minister Anand Sharma said a cabinet panel would consider any FDI proposal for investment above 26 percent in state-of-the-art technology.

RETAIL

FDI up to 49 percent in the single-brand retail sector will no longer require the FIPB’s approval. The government also said it will issue clarifications soon on its FDI policy for supermarkets.

COMMODITY, POWER AND STOCK EXCHANGES

Foreign investment of up to 49 percent will not require the government’s approval.

ASSET RECONSTRUCTION COMPANIES

India will allow FDI up to 49 percent with no government approval, but foreign investors will need FIPB approval to buy a bigger stake in an Indian asset reconstruction company.

COURIER SERVICES

Foreign investors can now invest up to 100 percent in the courier services sector and will not need government approval.

CREDIT INFORMATION COMPANIES

India will allow up to 74 percent FDI in credit information companies, with no need to seek government approval for investments up to that level.

CIVIL AVIATION AND MEDIA

The government left FDI caps in civil aviation and media unchanged at 49 percent and 26 percent respectively.